Transcripts For CNBC Squawk On The Street 20160523

Daughter sherri and the ceo and leader of viacom Phillippe Dauman. This morning he has filed a lawsuit just moments ago along with George Abrams in the massachusetts probate and family Court Challenging changes purportedly made to the trust arrangements by an attorney claiming to represent mr. Redstone. In a legal complaint, these two gentlemen, mr. Dauman and mr. Abrams who again have been removed from the trust that oversees the stake in National Amusements that in turn controls viacom and cbs, they are going to the court saying they want immediate judicial relief and a court ruling to invalidate the purported removal of them by mr. Redstone as trustees of the trust and also invalidate the removal as well as directors of National Amusements. They would assume then want him, that is mr. Redstone, to be deemed potentially incompetent and not able to make decisions. And very harshly worded language, guys, that accompanies this lawsuit. In a press release i just received Phillippe Dauman says of Shari Redstone after years of shes inserted herself into her fathers home. Go onto say in fact shes recently repeatedly arranged viacom Board Members to meet with her, weve heard some of this language in the last 48 hours as well. Mr. Abrams, for his part says my soul purpose in joining this lawsuit is to allow the court to determine whether Sumner Redstone, who turns 93 by the way i think this week, in his current diminished capacity has been subject to undue influence in his recent actions in changing his trustees and in changing other documents. They both believe that Shari Redstone is attempting to legally hijack her fathers wellestablished estate plan by removing professional managers and reportedly installing herself and an employee and a friend as in control of the trust. So, you know, the stuff about his health care and the lawsuit with herzer, that was a sideshow, this is the main bout now for control of viacom and cbs between Shari Redstone, and frankly at this point the trustees who were appointed by Sumner Redstone previously to oversee both National Amusements directors and most importantly the trust that will kick in upon his death or when he is deemed incompetent. Why would she keep the current management around if she gets this . Why wont she fire them immediately . Well, there are certain governance issues that dont allow you to fire them immediately, but she would be conceivably able to file and given theyre shareholders. Wow. This is a fight for life for dauman and viacom, many people believe somehow, jim, this will mean theres a potential sale or Something Else in the offing, may be disappointed. The sense i get at least this is Shari Redstones opportunity to assert her control by putting on people on the trust who will follow what she wants. Now, she will claim of course and has claimed by the way many times that she is simply following the direction of her father. Who is simply saying i am no longer in the belief that dauman is no longer to be the right man on the trust or mr. Abrams who had been his attorney for the last 50 years, one of the attorneys. What are the directors saying to you . I spoke to director yesterday on the phone he was on the record. He says, listen, this is New Territory for us. We cant control what happens in the trust, but as the lead director of the board, by the way hes only been lead director for about a month because previously was mr. Redstone and then mr. Dauman skprks mr. Solerno on the board for over 20 years stepped up as the lead director. And he claims, jim and carl, that they had a meeting on tuesday and wednesday of the board where they went over for a day and a half all of the different plans the company had and the way the board was going about measuring managements ability to meet certain targets and that they didnt hear from mr. Redstone at all. That he was silent the entire time. And i said, well, listen, Sumner Redstone has had trouble communicating for some time. Is that any different . And mr. Solerno seemed to indicate he would respond at least in the past to a certain extent and there was a belief on the part of the board that he was more involved. This is going to be very interesting because less than six months ago Phillippe Dauman was on the record testifying to mr. Redstones competency, so the question will become has he declined a great deal since then or not . Shari redstone as she has said in a number of statements indicates that her father is fully on top of things as he has been in the past and these are simply his wishes that shes carrying out to remove mr. Dauman and mr. Abrams from the trust. Thats the most important part of this by the way. Seven people on this trust, previously shari had three people herself but four not necessarily in her corner, without them she will conceivably have control or at least the appearance of control and therefore be able to do what it is she thinks is the best interest of viacom and cbs or in her best interest. Phillippe dauman well paid. Very much so. Especially given the performance of the stock. Are they really aligned . Thats the key problem i think for the defense they have a stock down dramatically in the last year and a half and performance as like you like to say suboptimal. Yeah, suboptimal sdpl this is the main battle. It has been joined now as the fight really is under way for the future of these two companies, guys. And this lawsuit not unexpected. The conversations i had this weekend would have indicated it was coming. It now has. They are going to try to get reinstated. Interestingly though if they are claiming that mr. Redstone is incompetent, then the trust would kick in. So conceivably you would have them reinstated as trustees and then the trust would be in control of viacom and cbs. Alternatively he will be deemed competent and they will be gone and conceivably mr. Daumans future very much in doubt. Cloudy. Wow. What a story. Big egos, huh . Trying to find parallels in or out of media that have this level of drama. As we said earlier the market focusing on fed speak this week, possibility of a june rate hike on the table. Williams now says two to three hikes seem likely this year adding that timing depends on the strength of the data. And then theres st. Louiss bullard saying a tight labor market and waning global weakness, weak gdp numbers and muted Inflation Expectations support the case against a rate hike. Netnet, and were going to get a lot more leading up to yellen on friday, they continue to lean hawkish, jim, almost all of them. I wonder whether because the market is not down that much if whats going on here is theyre softening for june by saying, listen, two to three, two to three. That really does make june feel more foregone. Weve been hit the stocks that need a weaker dollar have been acting terribly since may 10. And thats been the softening. But the fact is that the s p was good last week. So its making people feel emboldened, that were ready to handle what comes. Because the s p broke that threeweek losing streak. I think it got oversold, but i think also we want to hear yellen on friday. At harvard. At harvard. Radcliff day. They kept radcliff, isnt that something . Nice. By the way les moonves key speaker hes probably been on the phone with his bankers too. Everybody holding on. Friday is going to be a big day because historically thats not been a big day, im working. Im coming. Because shes coming in. Was that ever in question . No. Germanys buyer making unsolicited offer to buy monsanto for 62 billion in cash, more than a 20 premium over fridays close. Earlier on squawk box buyers new ceo spoke about his companys decision to make the bid public. Our decision to make this public follows the announcement of monsanto last week that monsanto received a private offer from us. It was out in the open. And of course we want to respond and explain to the public and to shareholders what the content of the offer is and why it is so attractive to monsanto shareholders. They also want to explain to their own shareholders why it is attractive, of course one of the key things weve pointed out a number of times last week is that bayers stock price has declined dramatically. There was a lot of concern the company was going to issue stock. There was concern whether the offer included stock to monsanto shareholders. Now we know it doesnt. Its all cash, but they will do a Rights Offering, something we dont often see here but common in europe for as much as 15 billion worth of stock. The deal itself though seen as creedive and then get back to, well, whats the real price here, whats the right price . Speaking of people close to bayer, who are structuring the deal, theyre talking this thing is as much as 16 times last months ebitda from monsanto and then you have the likes of Deutsche Bank this morning, german bank, say this is a lowball offer. Of course different multiples because of different years for monsanto versus the 15. 8 times 16 ebitda that is being paid for stra general ta. We dont have regulatory impediments of any significance here. There might be some minor overlaps, we can deal with them. Weve now made this public, were going to reassure our own Shareholder Base as to what were thinking, were going to lever up to four times but quickly reduce that given the cash flow of the combined companies, were going to stay investment grade. Yes, were doing a Rights Offering but this deal will be acreedive and thats where things stand. Well hear from monsanto. The expect is they will reject, but will it be a constructive rejection or one thats more scorched earth is the key question. When will the formers contact senators and Congress People and say this is going to go up big and were not going to allow this. Because this is a Justice Department that listens to everybody other than apparently anthem and cigna can attest to today on some of these reports. These guys are way too confident. They dont know this Justice Department. They dont know it. They know theres not overlaps and that monsanto was willing to pursue a deal with singenta that had more antitrust questions than this deal does. These things have changed. These guys should call me. I didnt get to solve twitter this weekend, but im much closer to where the Justice Department is. When did you have time to do that . In conjunction with the street. Analyzed every deal. And its really incredible the change. Incredible the change. And they should go look at the study we did. Because the study is out of control in terms of what this Justice Department is doing. And then theyre making their winging it. It will be very important when we hear from monsanto in terms of do they bring up antitrust as a concern and, again, everybody expects theyre going to reject. You always reject the first offer, or they simply talk about the fact they think theyre more highly valued than being given credit for. Dont forget the window to nominate directors for a nonstaggered board at monsanto opens october 1st. Yes, were not even at the beginning of the summer, but this is a new ceo right out of the box doing something incredibly bold by german. You do not want to make this a misstep. Youre going to win this if youre this guy, i got to tell you. Biggest takeover ever by a german company. Guys been on the job for three weeks. Whos his counsel . Whos his antitrust counsel . I think they ought to do some homework. Wow. I bet youre hearing directly from them. I hope i do. Instead of them coming to me the way they do, what is cramer talking about, can you get me to cramer . Here he is. I got time. When we come back, tim cooks apples tim cook met with indias Prime Minister and gave a revealing interview over the weekend. Well talk about what he has to say about possibly lowering prices, also some of this news regarding taiwan suppliers on the iphone 7. Also ahead the race for president heating up, goldman says that could be a good thing for some stocks. Look at the premarket s p down 0. 6 for the month. We have not had a down may since 2012. More squawk on the street from the nyse in a minute. charge music you wouldnt hire an organist without hearing them first. Charge so why would you invest without checking brokercheck . Check your broker with brokercheck. Theres no one no one surface. E. No one speed. No one way of driving on each and every road. But there is one car that can conquer them all. The mercedesbenz cclass. Five driving modes let you customize the steering, shift points, and suspension to fit the mood youre in. And the road youre on. The 2016 cclass. Lease the c300 for 359 a month at your local mercedesbenz dealer. Tim cook met with Prime Minister modi as the apple ceo looks to boost business and market share in that country. Cook made an eye opening admission about the cost of iphones in the country. Take a listen. I recognize the prices are high. What we want to do things that lower that over time to the degree that we can, so were looking at a number of different things. What we wouldnt do is lower our quality bar. We know how important that market is to them. Two things, its 125 degrees in india, record breaking heat. And the second is this report that some of these taiwanese suppliers are looking at targets well above the street. Its Economic Daily news. This newspaper has historically had a great relationship with fox com could be thats why you see broadcom stock moving, you see skyworks, cirrus logic, this is all the idea that everyone has been gearing up talk about something that no ones looking for, the idea that iphone 7 could be good because its been doa. All analysts been saying doa. In weeks to Economic Daily news i checked how authoritative Economic Daily news and fox con have been, 100 . They say things are good or if theres a lot of parts being order ordered, theyre right. A lot of people knew apple sale. Would be the highest production for an iphone in two years, at least two years. Its what Lowell Mcadams said would happen. All got lost in the apple is dead moment. Remember when apple was going to file chapter 11 with the most cash ever . Because analysts its sarcasm. Just make sure people know that. It would be ill advised for them to file chapter 11 with 50 some of our people on twitter dont understand sarcasm. No, they dont. I had to tell so many people i liked you this weekend. No, i really like him. Its true. Although they thought that was sarcasm. You cant win. No. Winning is not the point. Its not the point. Ceos will weigh in and say thank you because they did think there was a split between you and me. Okay. When we come back well get cramers mad dash as we count down to the opening bell on this monday. Take one more look at the premarket. More squawk on the street from the nyse is straight ahead. t s. What are we gonna do . How about we pump more into promotions . Nah. What else . What if we hire more sales reps . Nah. What else . What if we digitize the whole supply chain . So people can customize their bike before they buy it. That worked better than expected. Ill dial it back. Yeah, dial it back. Just a little. Live business, powered by sap. When you run live, you run simple. In a world held back by compromise, businesses need the agility to do one thing another. Only at t has the network, people, and partners to help companies be. Local global. Open secure. Because no one knows like at t. All right. Lets get to mad dash for a monday, seven minutes before the opening bell. Beginning the week, well start with the as. Different, david, two different firms, big cap firms, merrill lynch, and piper come out saying amazon is underappreciated. These two reports basically are what youve always told me, Amazon Web Services could be gigantic, maybe worth a lot. Bob peck said worth more than 100 billion. But when two guys come out at the same time youre going to get push to amazon. I just think these pieces are very reflective of all the excitement thats going on with that stock 27 retail. Right. Right. Although were they really seeing something we havent already heard about or focused on . None whatsoever. This is no longer a secret nothing i havent learned from you. Its true. Erg youf been saying is encapsulated. You like to point out when research is behind a stock two guys, when bam and piper, when they both jam it, its going to go much higher than this. Okay. We have another a. Alcoa, bank of America Merrill lynch upgrades it. The spin is coming and theyre saying that the new part, the more highly added proprietary 75 aerospace and that makes me think about the big vietnam jet order, which was big. Travel continues and i know the Airline Stocks have been doing poorly. But actual airline orders, aerospace orders are good and people are going to play call. You obviously know alcoa very well. You focused on this spin, but it hasnt really done a lot to add value. Not at all because the actual raw aluminum has been hurt so badly by the chinese dumping. Its kind of like everything other thing that the chinese do. Its stateowned producing way too much aluminum. Now, it shouldnt once this splits up, youre going to see the value. And the value of the proprietary is well in excess of the whole company right now. But when youre connected with anything chinese shs look at the way the tin, the iron ore stocks have come back ever since chinese quit playing games. I dont know what goes on over there, but the stateowned companies dont seem to listen to anybody including the government. The soes, state owned enterprises. So is bandit. Yes. All right. We have so many other things to keep an eye on this morning with the opening bell less than five minutes away. Stay right here on squawk on the street. Narrator sometimes its the things that the rest of us dont see that can make all the difference in californias classrooms. Its part of my responsibility as someone whos experienced to allow the door to be open for younger teachers. The teamwork between the teachers is essential. When we collaborate with each other. It makes everyone stronger. By helping my fellow teachers be successful, im helping kids be successful. Narrator the California Teachers Association educators who know quality Public Schools make a better california for all of us. Educators who know quality Public Schools with usaa is awesome. Homeowners insurance Life Insurance automobile insurance i spent 20 years active duty they still refer to me as Gunnery Sergeant when i call being a usaa member because of my service in the military to pass that on to my kids something that makes me happy my name is roger zapata and im a usaa member for life. Usaa. We know what it means to serve. Get an insurance quote and see why 92 of our members plan to stay for life. Youre watching cnbc squawk on the street live from the Financial Capital of the world. The opening bell in just about a minute and a half. A lot going on as we set the table on some macro data this week. Well get some housing numbers, a lot of fed speak as we said a while ago revised q1 gdp. And then some of this m a, jim, continues to make headlines. We havent gotten to tribune yet or aries. No, i think just for a moment housing will not be that strong, gdp will not be that strong. It will calm the question, i believe, the people who say two, three, based on what, retail weak, housing weak, no increase in wages. Where is it in the average . Of course theres been minimum wage increases but the government cant control that. So i think the data if weak is going to make the two, three people look silly. Really . Yes, i do. I think it will make them look silly. So youre not saying july im saying one in june and then lets look at the data. I think thats perfectly in sync with what the head coach has said. But these people, these linebacker coaches. Special teams coaches. Its time they should chill. Chill. Got it. Lets get a look at the s p here at the open. And at the big board ringing the bell today its lily celebrating 140 years as a public company. 140 years. Over at the nasdaq the uso supporting americas military Service Members and their families. Goldman out with an interesting note looking at Political Uncertainty arguing that 171 days until the election equity market uncertainty almost undoubtedly will rise. Well, theyve been you know, they got very neutral on equities. Thats in sync. At the same time they come out with a conviction buy list of schlumberger. You wouldnt do that, if oil goes higher people feel better about the market. A lot of cross currents, but i want people to be aware that we are still under the control of oil. And if oil goes higher, as the schlumberger piece would suggest because theyre talking about offshore drilling. They have to get in sync at goldman. Goldman did take slb to conviction buy as jim says 29 upside over the next 12 months. A lot. Along with some other raises today. Kbw cuts, actually, afl to market perform, aflac. Big lots got cut at deutsche on some of the overtime rules. On walmart too. The Sleeping Giant is awake. A lot of stuff about foot locker. I continue to believe nike had the wrong shoes out there and that that hurt foot locker. And dont forget, please follow these west coast finals between okc and golden state, because the steph curry shoe is, i think, not part of the foot locker stable the way it should. And that hurt foot locker. Under armour, i think kevin plank you know, everyone decided this is one of the stocks that is absolutely just under tremendous selling pressure. Right. Thats because people go to tjx like i did the other day. They sent me to the under armour stock department. People must think they have too much inventory. I got seven pair for about 9. Really . Yeah. Better than kohls. We didnt mention kohls yet. No, its gotten a lot of attention over the weekend because of the viral chewbacca video. Iger must be so thrilled. Buying some housewares, what do you think . Are they selling a lot of the chewbacca masks . I saw the video, i did. So you did take your time out to do that . I did. A win for disney, kohls and facebook, this did not happen on youtube or periscope. 135 million views. That is interesting. Kohls of the stocks reported last week im putting kohls in the they need chewbacca more than anybody. They got to have like weeks worth of chewbacca because those numbers were so bad. Worse than macys, i thought. Can you imagine that benchmark . Thats saying a lot. Hows sears doing . Great. Its good . Presentation good when you shopped there this weekend. Beautiful. That was sarcasm. Lucky strike, ballmore, sears. Lets play jeopardy. What are three bowling alleys. Thats terrible. Celebrity jeopardy. Thats terrible. Go ahead. I wanted to hit walgreens. Really . . Late on friday you saw Barry Rosenstein stepped down from the board of directors. Yeah. We had a sense that the sale of stock goldman did earlier last week was potentially walgreens reducing its stake. My understanding was this is not in any way them turning on the them in the future but redemption cycles. Really . Not having the maintain the same level. I wanted to get to that because it was a story we sort of couldnt confirm or i wasnt able to confirm it was jana that sold. They did. Agreed upon a certain amount of their stake for them to continue to have the board seat he had, they had two, i believe. So thats the pressure. Look, i think walgreens is going to have a great quarter, but these sellers have really defaced the stock. And then the companys ceo. Oh, i love that guy. Who owns the vast far more than anybody else. We should get him on. Hes been on. Yeah, i know, we got to get him back talking about this change on the board taking control of it again. Hes very aggressive. I love him. Thats why the trust brought him. Hes an animal. Thats what you want. You want an animal sfwl you want an animal. People should buy cvs, they had a great quarter. Not channel 2. No, buy cbs channel 2 because everythings in play. You mentioned that im reading through the complaint now this morning. We did get the lawsuit we were anticipating from philippe dauman, George Abrams seeking to be reinstated on the trust that oversees the controlling stake in viacom and cbs through its ownership of National Amusements. Im reading preliminary statement here. Ive just gotten the actual complaint itself. They are seeking a judicial ruling declaring that the reported actions some early dismissing replacing them should be made null and void, that they remain in office as trustees of that trust, and that all continued efforts allegedly brought in the name of Sumner Redstone to dismiss plaintiffs should be enjoined. Viacom shares are up, although it remains unclear to me as to whether theyre simply responding to the possibility which is now much greater that mr. Dauman will be removed as the companys chairman and ceo, eventually, or sooner than might have anticipated, or, jim, to some idea that theres going to be consolidation here. The beneficiaries of said trust are not Shari Redstone, they are the grandchildren and anybody born prior to mr. Redstones death. Hes obviously still with us. But if he is viewed or deemed inkme tei incompetent, the trust would take over. The interesting thing here is theyre going to argue in terms of reinstatement of the trust that mr. Dauman, mr. Redstone whom they say suffers from Mental Illness and afflicted with a disorder impaired cognition, slowness of, apathy and depression because of his physical and diminished health hes unable to initiate or participate in meaningful conversation including communications. And theyre going to argue hes been mentally impaired, which means the trust should take over but that they should be reinstated because of course his removal of them was not something he actually meant to do but he was in power of Shari Redstone. She vehemently denies thats the case. What an incredible battle going to take place here. How rich do you have to be, david . For these two companies. How rich . Bernie sanders may have something. These are rich people. These are rich people. Well, there are plenty of people whose affairs are not marred in this way. Thats true. Now, there was a deposition where redstone talked at length about what his former well, he did speak at length. He did say a number of things about his former he had strong words. He was able to however he was not able to remember his birth name. He was not able to do other things that your points a good one. The same group that was testifying to his mental competency only six months ago or even less is now saying hes incompetent. Yeah, thats i dont know. This is tawdry. Its dallas, beverly hills. Its unique. Nice. Finally, jim, i dont know if you saw over the weekend, jeff commencement speech in which he talk about an era now of global protectionism and in his result ge will have to localize a lot of their business being taken as a bit of a milestone in terms of ges culture. When i spoke to jeff recently about this issue, you know, he reaffirmed dont worry about it well make the numbers. Theres been a big step up here in terms of protectionism, in terms of attorney general being anti deals. When obama put through that big tariff on steel, i dont know why they didnt get more attention. That was really the beginning of, hey, listen, well do tpp, but were going to play hardball. And this election, the democrats squarely in the cross hairs is protectionism. People keep saying, listen, sanders is making inroads and going to drive hillary to this view, which would be its very union oriented view. I dont know. This is really the big story. I think this is a big story of our time. This total shift against our trade partners and a belief that our workers have been sold out by our leaders via digitization and you mentioned cigna briefly, carl, were taking a look at the two stocks. This weekend the wall street journal reporting open disagreements between these merger partners. And theyve got a long way to go yet to get the approvals for that deal of course. Youre also talking etna and humana getting together, cigna shares down about 3. 7 . Remember, even prior to them entering the deal there had been disagreements there in terms of mr. Cordani, the ceo of cigna and his role but apparently they are still moving ahead with a deal that may not see its approvals if they get them received until early next year. Still a ways to go. Wow. Meanwhile United Health by getting out of these exchanges not worried about the government approving any deal has just blown away the numbers. These guys obviously are they want the government to like them. Theyre not getting out of the deals. No, theyre not getting out of the exchanges. These stocks would all be much higher the spread in these deals is so enormous theres not much play in them because of how long its going to take and just the concern. To jims earlier points about monsanto and antitrust earlier that this is going to be a tough one. Well see. Yeah, i mean, i think theyre going to have to make some conditions that theyre going to stay in these Affordable Health care. Yeah. Because right now United Health pulls out of anywhere they cant make money. And because congress has been unable to adjust, they dont want to play. You cant do anything to deal with the aca except overthrow it i suppose. How about monsanto up only six . What does that tell you . Well, its 108 on a 122 deal on monsanto. Its over 15 discount, but it would take 9 to 12 months to get done, and then some questions still about what the response is going to be. But dont forget a lot of this would have been done in private for monsanto and bayer except for the fact that the monsanto executive said that stupid thing where he denied that there was anything going on, which was it was ill advised. Yes. They had to come out and correct it publicly which put this in the public realm. Guys, i did want to quickly get to a report here on tribune. Yeah, what is the story there . And gannett, weve been following this for quite some time. Yeah, give me the old animation. I feel better when i get that. This morning tribune rejects gannett but not without a lot of back and forth and interest goings on again here. 15 a share was the renewed offer from gannett to buy tribune, almost doubling of the stock price prior to their first bid. But gannett tribune comes out rejects and does a separate deal with a gentleman in los angeles for 70. 5 million in which hell buy stock at 15. And gannett comes out for its part said listen despite repeated efforts regarding our 15 a share all premium offer they continued to take actions that gannett believes are designed to convey disproportionate control of the enterprise to select stockholders while ignoring duties to tribune stockholders. They know this issue of 4. 7 million shares of kmet not capital, the name of the entity, will also be added to the board. By the way, tribune went to oak tree, its second largest holder, and oak tree said in a filing on friday, mr. Farrow, the chairman came to us and asked if we would sell our shares to an Unidentified Party who we denied because we believe that a better price than 15 per share would be available in the tribune would engage. June 4th is what g naannett is hoping for here. Well, the stock has had if they walk away, seven. Seven if they walk away. Well, thats a possibility here. Theyre making threats. Well see if they follow through. Wow. Meanwhile dow is mixed but apple almost at a onemonth high as the best performer. Lets get to Mary Thompson on the floor. Hey, carl, its been choppy trading in the early going on this monday morning. Right now the markets higher across the board although very modest gains there. We are seeing the vix tick up a little bit. Little strength in the dollar index putting pressure on commodities and yields on the tenyear pulling back after last weeks big gains when we had a lot of chatter of course about a potential rate hike here in june or july in the u. S. Lets look at the s p 500 because it managed to break a threeweek losing streak last week. Right now up just fractionally. These are the things the markets face in the days and weeks ahead. Of course more fed chatter about a rate hike. We had three fed members coming out this morning basically adding their voice to the expectations we could see a rate increase in june or july if the data supports it. But also of course over the weekend there was the g7 meeting when once again finance ministers expressed concern about weak Global Growth and right now a number of people believe stocks are too expensive. Last week there was a report out of Goldman Sachs saying at this point they wouldnt buy equities because the growth doesnt support the risk that you would take in buying equities at this point. So right now while the markets are showing modest gains, again, there were a number of head winds that face them in the days and weeks ahead. Couple of things in addition to the fed speak that are front and center, of course the deals weve been speaking about them all morning. Lets take a quick check of the stocks monsanto with the bid from Germanys Bayer of 122 a share, up over 6. Cf industries walking away from its planned purchase of europes oci, the reason the treasurys actions to prevent tax inversions its stock actually moving higher and tribune lower after it once again rejected yet another bid from gannett. Were also watching freeport deciding not to go ahead with a spinoff of its oil and gas properties. And its stock reacting to the downside, again, because of the weakness weve seen in the oil and gas area right now. Lets check on this sector because as we said earlier the stronger dollar, one of the factors in slightly weaker Commodity Prices that we are seeing today and energy among the weakest performing sectors in early trading. Right now the dow holding onto a very modest gain of just about 4 points. Carl, back to you. Mary, thank you very much. Oil prices not doing a whole lot. Lets get to Jackie Deangelis at the nymex. Good morning, carl. Starting on a lower note wti trading over 47 a barrel. We did roll to the july contract seeing some volatility on friday. That has started to ease a little bit. Stronger dollar as mary pointed out certainly part of the problem here. The dollar index over 95. She also mentioned that june rate hike in play, thats what commodities traders are worried about right now. We did make a run at 50 last week but we couldnt cross that pivotal psychological mark. Technical levels tend to be tested like that before they are crossed, so some traders are not ruling it out. Now, the upside momentum that we saw last week, the sentiment was pretty strong, even support on down days was pretty strong when it came to crude prices, but this dollar remains the caveat, also this time of year remember gasoline demand is strong and that tends to push crude prices higher. Wti and brent trading near parody right now so indicates the wti price and the wti commodity is more in favor with respect to the international benchmark. The rest of the Energy Complex is lower because of that dollar with the exception of nat gas, we are expecting to see a spike in temperatures that will boost demand for nat gas. And i will say gold prices falling under 12. 50, thats pretty key. Again, dollar oriented at this point, carl. Jackie, thank you very much. When we come back, former fed governor Robert Heller will weigh in. Does he think a june rate hike would be justified . Dow mild start to the day up five points. Dont go away. Is car . Came courtesy of james and patricia thompson. This tv . Margaret and tom lee. The championship game ball . That was sebastian diaz. Good guy. And all i had to do was ask for their money and pretend i was investing it. Their life savings is now my lifestyle. Female announcer dont let someone else live the life youre saving for. Find out if youre dealing with a registered investment professional at investor. Gov. Its a great first step toward protecting your money. Before you invest, investor. Gov. Thank you. Ordering chinese food is a very predictable experience. I order b14. I get b14. No surprises. Buying business internet, on the other hand, can be a roller coaster White Knuckle thrill ride. Youre promised one speed. But do you consistently get it . You do with comcast business. Its reliable. Just like kung pao fish. Thank you, ping. Reliably fast internet starts at 59. 95 a month. Comcast business. Built for business. Omg. You are so funny. In the time it took me to type that, if i were driving 55 miles an hour, id have driven the length of a football field blindly. Not funny at all. Dont text and drive. The more you know. As the race for the white house tightens, Dallas Mavericks owner and shark tank investor mark cuban is saying hes open to becoming a running mate with either Hillary Clinton or donald trump. If she really did come to you, would you listen . Absolutely. But the key would be shed have to go more to center. If shes willing to listen, if shes willing to, you know, hear other sides of things, then im wide open to discussing it. What about donald trump . Same. You know, im an independent. Im fiercely independent and think for myself. And id have the same conversation for donald. Donald has a real chance to win, and thats scary to a lot of people. But whats scary about it to me is that you can see him now trying to do what he thinks is right to unify the party. And hes listening to everybody, which is fine on the surface, but whats also happening is its coming across as if hes proposing things based off the last person he talks to. On that note he is reportedly set to meet with corker today. Right. Whos been talked about as a potential v. P. Pick. These are people part of the affi affirmament i dont think thats going to happen. Donald trump has spoken very positively about carl icahn. Cuban is its hard not to like that guy. Very hard not to like him. Hes great. Thats a blessing that he just gave trump. In a way. Although he did say he changes his opinion all the time, didnt he . Well, maybe if you go with cuban you make a statement. Thats pro business, that is very optimistic. Cubans an optimist. Trump is not an optimist during this period. I think hes been slamming people. This is an optimist, change the tone. Yeah. Although hard to imagine cuban being sort of a silent partner in the naval observatory. Yeah, hes kind of like frank when frank got in the white house as v. P. In house of cards. Do you remember . Shark tank lives on. With Vice President mark cuban well get stop trading with jim in a moment. Dow now down 13 points. Ssed most of the show. woman and theres no way to restart it. jon bon jovi with directv there is. You see, weve got the power to turn back time so lets restart the show that started at nine and while were at it, lets give you back your do and give her back the guy she liked before you hey, thats the power to turn back time. vo get the ultimate allincluded bundle. Call 1800directv. Time for cramer and stop trading. Maybe goldman did this and not realized it, but i doubt it. They launched on Human Resources Financial Management software today, and their favorite one is intuit. Basically i had intuit on, i think theres a lot of good things happening there, thats quickbooks, but most importantly they report tomorrow. So i dont think you would stick your neck out today and recommend intuit if you were concerned about the quarter. Now, when i had management on, i certainly wasnt concerned about the quarter because i think that theyre on fire. But i think its important when we see these upgrades or launches or buys the day before, they tend not to be embarrassed when the companies report. Jim, whats on mad tonight . Well, im going to be looking at five stocks people hate that actually should be loved. And also, you know, the medical device business, i dont know if anyones focused on it, its a bull market. Medical devices theres an amazing bull market. And i am on it tonight. Youre on it. A lot of new customers moving into that age bracket. Yes. So thats really a lot of what it is. Its baby boomers as a cohort. And all the fake stuff not fake stuff not fake stuff. Well, i dont mean you werent born with it. If you werent born with it they put it in you. Oh, okay. Look, im going to go this viacom thing is too hot. I am going to do a think called trilianc. The Norfolk County court will now decide the fate of viacom and cbs. Learned hand there . Love learned hand. Jim see you tonight 6 00 p. M. Eastern time, mad money. When we come back, tim cook in india, more reports. Dows down seven points, dont go away. Big plans. So when i found out medicare doesnt pay all my medical expenses, i looked at my options. Then i got a Medicare Supplement insurance plan. [ male announcer ] if youre eligible for medicare, you may know it only covers about 80 of your part b medical expenses. The rest is up to you. Call now and find out about an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, it helps pick up some of what medicare doesnt pay. And could save you in outofpocket medical costs. To me, relationships matter. Ive been with my doctor for 12 years. Now i know ill be able to stick with him. [ male announcer ] with these types of plans, youll be able to visit any doctor or hospital that accepts medicare patients. Plus, there are no networks, and virtually no referrals needed. So dont wait. Call now and request this free decision guide to help you better understand medicare. And which aarp Medicare Supplement plan might be best for you. Theres a wide range to choose from. We love to travel and theres so much more to see. So we found a plan that can travel with us. Anywhere in the country. [ male announcer ] join the millions of people who have already enrolled in the only Medicare Supplement insurance plans endorsed by aarp, an Organization Serving the needs of people 50 and over for generations. Remember, all Medicare Supplement insurance plans help cover what medicare doesnt pay. And could save you in outofpocket medical costs. Call now to request your free decision guide. And learn more about the kinds of plans that will be here for you now and down the road. I have a lifetime of experience. So i know how important that is. Good monday morning. Welcome back to squawk on the street. Im Carl Quintanilla with sarah eisen, simon hobbs and david faber at the new york stock exchange. Mild gains this morning, dow in the green but big week ahead with Specialty Retail earnings, fed speak, housing data and yellen on friday. Oil being a little troublesome this morning with stronger dollar action as well. Our road map begins with the market. Is the market really ready for a june Interest Rate hike . Weve got new comments from the Federal Reserve. There seems to be no end in sight for trouble at the tsa. Well get an update on what travelers can expect ahead of memorial day. The viacom saga heating up with the filing of a new suit this morning plus the board complaining about a lack of access to redstone. We have the late egs details on all of that drama. But lets start with the market, stocks relatively flat as oil prices slide, as carl just mentioned, and investors brace for a possible shift in fed views. So which sectors should investors be focusing their attention on this week . Joining us is our very own mike santoli and david kelly, chief global strategist at j. P. Morgan funds. Before we get sector specific, david, on this question of whether the market is okay with the fed moving to raise Interest Rates in december, whether it can stomach that, have we gotten a verdict yet . No, i think the market is still pretty complacent. The market just doesnt believe the fed will pull the trigger. This is a fed cried hawk so many times. And so as promised to maybe raise rates so many times that now when you see this concerted effort among fed officials to raise expectations of a june increase, i think the market hasnt quite bought it yet. I think there may be a surprise in june if the fed follows through and that could be a laggard for the bond market. What are you watching, mike, to tell whether the market can handle this or not . Well, i think what were doing is challenging some of the premises since february weve only given back about 20 of the gains, but im looking at the dollar sensitive areas. On the back of stronger oil, weaker dollar and fed on hold, those to me were the three legs of the stool for the rally. And were at least modestly challenging all of those. In terms of sectors im definitely looking at those consumer staples, those kind of bond like stocks that people have piled into as bond substitutes because they assumed by the way that rates were going to be low for a long time. So thats one thing that i think, you know, campbells soup on friday was a little bit of a tell. You thought this was in your safe part of your portfolio, its down 6. 5 in a day. So do you dump, david, some of the winners of the year, the utilities, telecom that pay dividend and bank on low rates . I think you try to turn to financials that will do better with higher rates. We need to be more cyclical. I think growth will pick up later on this year and the fed will raise rates. I think thats just not quite priced into the market right now. Yeah, its interesting, david, the front page of the journal as youre probably aware has an article that says if they do raise rates then theres going to be no turmoil in the markets because the dollars down almost 3 , oil is higher and were no longer flirting with recession or thinking about recession in the country. Youre challenging that clearly. Not really. I think the economy will do fine. I do think that Interest Rate sensitive assets will be challenged by it just because of the attractiveness of higher rates at that point. But i think the economy can with stand and i dont assume the dollar will necessarily rally when the fed raises rates. Weve got this notion that thats bound to happen. I dont know that its bound to happen. Right. I think the fed could raise rates and then i think the dollar can rally again. I think youre picking your words really carefully, david. Whether the stock market can deal with rate rises because, a, probably doesnt think it should come and its not just one or two rate rises, is it . The idea theyre beginning to drive a wedge into the market which means much more rate rises further down the line than the market is expecting as well, potentially. That would be the argument. You know, i dont think these would be aggressive rate increases whatever happens, but i think the markets wrong on both counts. I think well get rate increases but its not bad for the economy or the market. What is bad for utilities and the bonds market that could actually cause a rotation towards equities, which should not be as hard hit by rate increases at the bond market. I mean, there are two camps, mike, one that says history suggests that an environment of rising rates isnt necessarily a bad thing for the market. The stock market can rise during that period, but theres another that says this isnt normal at all. Were in an earnings recession. Were in a period where the overseas growth is barely happening at all. So which one are you thinking wins out . Well, the second point that you bring up i think is what the market has to adjust to, and that adjustment probably would not be painless, which is that usually when youre raising rates, when the fed is raising rates profits growing, youre confident in the Growth Outlook at least to some degree. So i think right now what the equity market is trying to deal with is an economy that seems to be perhaps Strong Enough for the fed to move but not Strong Enough to instill confidence that you have corporate Profit Growth coming back. Well, the other point you make very clearly in your column is that most investors are fearful. Yeah. Certainly most retail investors, the majority of the public has been withdrawing money from stock, mutual funds and etfs, theyve been sitting on the sidelines when they have been participating in stocks its what they believe to be safe sectors absolutely. They are not considering the possibility the market can have one of these adjustments and go to higher maybe they dont care to stick around and see. A lot to think about, guys. Thank you for kicking off monday here at the open. Lets take a look at shares of bayer and monsanto. Early this morning bayer making public its offer to acquire monsanto for 122 a share in cash. The cash being perhaps something of a surprise to those of us whove been following this closely since monsanto first confirmed that it had actually been approached with an offer by bayer last week. The cash offer of course at 122 a share, bayer says is worth 15. 8 times the last 12 months of Ebitda Monsanto put up. They claim thats a significant multiple and one that of course will deliver significant value to monsanto shareholders. However, others weigh in saying, well, based on the projected ebitda of the company in 2017, Deutsche Bank for its part saying this multiple is well below that. That singenta is receiving from camp china. All of this will be things for shareholders to figure out. The key here bayer in coming public is able to start to explain to its own shareholders its rationale mind the deal and the structure of the deal itself. As i said cash 122 right now at least would be exchanged for monsanto shares, however, bayer would turn around and do a Rights Offering for as much as 15 billion paying for roughly 25 of the 62 billion that it will be spending to acquire monsanto. So that will have a dlilutive aspect, at the same time being accredit cretive to earnings. You can see this morning shares are down yet again having the effect well, shouldnt have any effect on monsanto shares given its only a cash deal, but it also may have effect in terms of confidence overall in their ability to get this deal done. That said, bayers ceo is new to the job having been on it for only three weeks although hes a longstanding executive at bayer. Hes only taken over the ceo role very recently. This is a very bold move for them to do. And as i pointed out a number of times if they want to follow it through should they receive a rejection from monsanto over time and a continued rejection, they can actually try to act to throw out the board of directors at monsanto given it is not staggered and it does come up at least the window for that election comes up at the beginning of october of this year. So at this point weve got now, guys, a public offer that is out there, the ability for bayers shareholders to understand some of the rationale behind it and for monsanto shareholders to decide as well what their thoughts are. The hope had been on the part of some that id spoken to you would get a higher price, and of course that still remains a possibility given often in these situations monsanto and or the target company would reject initially. Antitrust also a concern at least some would say, including our own jim cramer, although for its part bayer says we dont really see any real overlapse of significance and dont believe we have a lot of concern on the antitrust. Do you get a knockout on the first offer . Sometimes. You get a knockout when they agree to a deal. First offer is enough, okay, ill take it. Baa in this case the talks became they were not able to do these talks in private because monsanto executive came out stupidly and said there was nothing going on and then monsanto quickly had actually correct the record publicly which put this out into the public realm. All right. When we come back, if youre planning to fly any time soon, listen up. The trouble at the tsa shows no end in sight. The major lines you might be seeing at the airport. Apples tim cook was in india over the weekend, but the stocks moving on these reports of much higher iphone production targets than analysts expect. Semis are leading the nasdaq, that and a lot more when squawk on the street continues. Anything worth pursuing hard work and a plan. At baird, we approach your Wealth Management strategy the same way to create a Financial Plan built to last from generation to generation. Well listen. Well talk. Well plan. Baird. Man 1 i came as fast as i man 2 this isnt public yet. Man 1 what isnt . Man 2 weve been attacked. Man 1 the network . Man 2 shhhh. Man 1 when did this happen . Man 2 over the last six months. Man 1 how did we miss it . Man 2 we caught it, just not in time. Man 1 who . How . Man 2 not sure, probably offshore, foreign, pros. Man 1 what did they get . Man 2 what didnt they get. Man 1 i need to call mike. Man 2 dont use your phone. Its not just security, its defense. Bae systems. Long security lines at airports leading to rising tension amongst travelers ahead of the big travel weekend. And lawmakers of course are taking aim at the tsa. Joining us from chicago is our very own phil lebeau with the latest. A tense situation, phil. It has been, simon. The interesting thing is were noticing a little bit of decrease in the length of lines reported over the last week. In fact, over the weekend there was a far fewer number of reports in terms of people saying, look, ive been in line for an hour and a half or two hours. So the situation appears to be improving. Remember, youve got a number of major metropolitan areas that are now focused on the tsa, that includes here in chicago which overnight the Mayors Office announced that it will be issuing tsa report cards basically every two weeks telling people here are the lengths of the lines, heres what the staffing is, how many canine teams are involved. For the tsa this is about adding staff and overtime as quickly as possible. Remember, they made the announcement about a week and a half ago that they were going to be shifting resources because were heading into the holiday weekend. They know that theyre going to have long lines, and then after that the airplane schedules ramp up. Critics have been calling for more private contractors to run the security lines at airports around the country, but the head of the tsa points out even those private firms ultimately have to report to the tsa. Remember that private contractors contracted to the federal government still works for tsa, its still tsa management staff that runs it chl the cent doesnt work for the airport, it works for tsa is trained at tsa standards has to work at tsa standards, that said i encourage anyone to take a look at it. You can bet there are more airports interested in hiring private firms to run the security operations, even though they report to the tsa, because that way the airports to a certain extent can say, look, we have certain standards we want to meet in terms of getting people through the systems, through the security checkpoints and with those standards in place they hopefully can put some incentives in there for those private firms to run the operations. But well see how this weekend goes. Carl, its going to be a very busy, busy summer. And this is just the start this coming weekend. Yeah, maybe more people taking to the roads instead, phil. Thank you very much. Our phil lebeau. For more on what travelers and airlines can expect, tom blank is the former tsa deputy administrator. He joins us this morning from washington. Tom, good morning to you. Good morning. Nice to be with you. Is privatization the answer here . Well, i think the jury is probably still out on that. Listen, it probably cant hurt. Its worked very well in the major airports where its been put in place, like San Francisco. But the administrator is right, you do have to do things the same way. The question is how much more flexibility would private screeners have. I think one of the things that has happened here is that over the past couple of years tsa has become fully unionized. I think its a Government Agency that wouldnt be thoen for its flexibility or being nimble anyway, and now with full unionization that may be contributing to how tsa can respond to the situation that it has. If you switch over to private screeners, you may be able to move people around, address long lines in a more quick and nimble way. So that would be one question that i would point out about the conversion from private from tsa screening. Yeah. When people ask you why the problem has become so acute, whats your general laymans answer . Weve heard everything from just general traffic trends to bad projections on prechecked clearances. Why is this happening . Well, if tsa were a business, wed be saying they made bad assumptions about their marketplace. They made an assumption that their precheck, the fast line, was going to create enough efficiencies that they could save 3,000 head count, and that turned out to be inaccurate. Now, whether its the 85 fee that is preventing people from joining precheck or not, thats not known. But tsa believe that they could keep the lines short and do it with 42,000 head count rather than 45,000 head count. They made a mistake in those assumptions. The second thing is last summer they got a very bad security report card, which means they have been taking their Personnel Resources and retraining them, so there has been less than 42,000 even available. And were changing the culture out there from one of convenience to one of security. And then the airlines came across with increased passenger bookings. So a number of these things are creating a problem for tsa. And it probably wont fix quickly because it will be this fall before Congress Allocates tsa more money to hire more people and train them and deploy them. One reason you didnt mention, tom, i was sort of surprised you didnt mention is i wonder if its the airlines fault at all for all of these excess baggage fees . I mean, when you have to pay 25 to check bags, youre going to carry on more. And so many people have carryons and that takes a lot longer to screen and check for. Should the airline haves to pay a fee or should airlines beheld responsible at all . Well, its certainly a factor and a good point you bring up. I think tsa should engage in some negotiations with the airlines. I think ranking people in the administration might want to talk to the airlines about perhaps a temporary suspension in baggage fees because there is no question that increased amounts of carryon do take more time for inspection. They take more time obviously in the cab into get them all loaded. And its clearly a correlation between the amount of carryon baggage that tsa has to process and when those baggage fees were fully implemented. At the same time, tom, i think for people particularly who are watching the show from abroad they will say to have these sorts of delays, mass delays for the sake of three or four or 5,000 people, new Staff Members in a population of 300 million seems odd, why not give them an extra 100 million, whatever you feel about the tsa and get the whole thing shifting. Theres got to be an argument for just kind of throwing a little bit of money at it, hasnt there . Well, theres two points. One, congress could act to do that. Tsa and the department of Homeland Security could ask to reprogram funds that are curr t currently appropriated onto tsa to fix the problem. But another factor is that in europe while government oversees security, the airlines and the airports are primarily responsible for it. Therefore as businesses they have the capability to respond more quickly to changes in the marketplace whereas here in the u. S. A Government Agency just doesnt have the capability to do it. Tom, were going to see how the summer goes, thats for sure. Thank you so much for your time. Thank you. Tom blank, former tsa deputy administrator joining us from washington. Up next, the head of the bank of japan defending his credibility in the face of recent criticism. What he had to say about the state of the Global Economy. Plus, Federal Reserve members revealing new hints about when we could actually see an Interest Rate increase. Are the markets ready . Well talk to a former fed governor when squawk on the street comes right back. Its more than a network and the cloud. Its reliable uptime. And multilayered security. Its how you stay connected to each other and to your customers. With centurylink you get advanced technology solutions, including an industry leading broadband network, and cloud and hosting services all with dedicated, responsive support. With centurylink as your trusted technology partner, youre free to focus on growing your business. Centurylink. Your link to whats next. The bank of japan under pressure. A few recent policies have spooked investors, negative Interest Rates and intervention to keep the japanese yen from getting too strong. Japan is trying desperately to boost growth and raise inflation, but efforts are falling short. Cnbcs sat down with governor kuroda this weekend at the meeting in japan. Heres what he had to say about some of the criticism. I dont think our credibility has been reduced in any way because as you may know also the u. S. And Central European banks have delayed and delayed when the target is met because, i mean, not just japan but also u. S. And europe having space, breathe, shop including quality prices including oil prices and that has affected the inflation rate among the three major countries. He was also asked whether hes actually targeting the currency at a certain level to help meet his inflation goal. Listen. Policy is really targeted to inflation rate. But of course inflation rate is affected by many factors including output gap, Inflation Expectations and so on and so forth. And they in turn could be affected by Exchange Rate and so on and so forth. So we do not have a policy to target to Exchange Rate, but if including Exchange Rate affect expectations or understood lying inflation trend and if we judge necessary then we you would would not haste governor kuroda there saying theyre not explicitly targeting the Exchange Rate. Guys, heres the problem, the japanese yen is about 10 stronger against the dollar, so far this year. The japanese stock market is down more than that. Topix down 13 . On a year when they did move into negative Interest Rates and theyre doing everything they can to try to stimulate the economy. When you hear this debate over whether Central Banks are maxed out and whether theres any efficacy left in their policies, a lot of people are looking toward japan right now. Well, i dont think the americans quite believe what hes saying, do they . They do think hes trying to weaken the yen which is why youve had comments basically saying watch what you do. You know this the classic argument is providing your policy internally for whats happening for your economy you have free reign, but if you target or move the Exchange Rate thats when your colleagues will take issue. Which is whats dpoen on it would appear behind the scenes this weekend. Disagreement which is why yen is strengthening again because people are skeptical japan will go through with threats to intervene if it doesnt have the u. S. Permission. Bottom line is what japan would love to see is the Federal Reserve raise Interest Rates and get the stronger dollar and do the dirty work for them. Up next, tim cook gave a revealing interview in india. What he said about the possibility of lowering iphone prices. More twists and turns in the viacom saga. A new suit filed today and fresh complaints from the board about access to redstone. David faber has the latest details when squawk on the street comes right back. Good morning everybody. Im sue herera and here is your cnbc news update at this hour. President Obama Meeting with vietnams president at a formal welcoming ceremony outside the president ial palace in hanoi. The president is trying to bolster trade ties with the communist nation. A bit later at a News Conference president obama lifted the u. S. Arms embargo to vietnam. Weve agreed to continue deepening our defense cooperation including patrol boats and training for vietnams coast guard and to work more closely together in responding to humanitarian disasters. And i can also announce that the United States is fully lifting the ban on the sale of military equipment to vietnam that has been in place for some 50 years. Syrian state tv says at least 65 people have been killed in a series of suicide bombings and explosions in coastal cities that are strongholds of president assad. Isis claiming responsibility for the multiple attacks. 18 girls were killed in a fire at a boarding school dorm in northern thailand. The victims were aged between 5 and 12. Firefighters took three hours to extinguish the blaze and pulled survivors and bodies from a second story window. New England Patriots Quarterback Tom Brady will appeal the federal court ruling. His lawyer telling abc news theyre appealing to the entire Second Circuit court of appeals. Well keep you posted on that one. Thats the news update at this hour. Simon, back down to you. Thank you very much. Meantime Federal Reserve members are speaking out in force making the case for a nearterm raise in Interest Rates. St. Louis Federal Reserve president saying labor markets are relatively tight this may put upward pressure on inflation Going Forward raising the case for higher Interest Rates. Boston Federal Reserve eric rosen gren telling the ft i would say most of the conditions laid out in the minutes as of right now seem to be on the verge of broadly being met. And San Francisco fed president John Williams in new york earlier saying the exact timing of the rate rise depends on the data. Two or three rate rises this year seems likely. In other words, we better start doing it now to get them all in. Bob heller, former Federal Reserve governor and former cnbc contributor. Good morning. Good morning. Bob, why do you think we are getting what somebody described as a communications assault from members of the Federal Reserve . Yellen will come through of course on friday. They are out in force. What are they trying to achieve . Well, first of all they were just speaking anyhow, so at the moment however i think theyre trying to send a signal that june is definitely on the table. Whether they actually do it or not, thats the second question. I certainly think they should be doing it, so i hope they will. It seems unusual, bob, i mean, i dont know if you can back it up with impiricily, but they all seem that a rate rise is coming. Did they shift their expectations or did the market just become very complacent . Well, i think theyre very, very close to their actual targets they want to achieve. Look at the Unemployment Rate at 5 . The inflation rate they talked a lot about, they wanted to get inflation up to 2 , and now theyre there. The cpi index is above 2 , actually, on a yeartoyear basis. And the personal Consumption Expenditure deflay tor, which comes out only every quarter of a year is just a tad below the two, 1. 75 . Yes. So were right on target. So i think the fed should normalize its policy as fast as they can. It does feel like no matter which way they go theyre going to face enormous amounts of criticism, bob, if they listen to your point of view then they could face a lot of criticism that the economy is still weak and that corporate earnings are still shrinking and globally theres not a lot of growth. But on the other hand if they dont move then people are going to say theyre behind the curve. It seems like damned if you do, damned if you dont. Well, they are definitely behind the curve. In the old minutes the last time around they say that the Federal Reserve Monetary Policy as well as fiscal policy is not posed properly for the economy to withstangd any major shocks. So they should have been normalizing a long time ago. At the moment you have only 2 growth. Why . Because there are too many regulations. The government is piling on new regulations. And that is whats holding the economy back. Its not Federal Reserve policy. Federal reserve policy is still very accommodative. Well, the other problem is that in the past when theyve tried, bob, recently the markets have moved against them and theyre like, oh, well, we cant do it now. Even now theres a suggestion, you know, they cant move aggressively because the dollar will react. And that will undermine them. So theyre kind of in this dance with the markets trying to warn them its coming, hoping theyre not going to react. And if they do react, stepping back inevitably. I mean, its a little like the boy who cried wolf, only ultimately the wolf did come back. Well, i think youre saying it just right. Its a childrens game, almost. We want to avoid a tantrum. Who throws tantrums . 2yearolds throw tantrums. Doesnt mean that the parents should stop and let them do whatever they want to do, give them all the candy they want to have . No. The Federal Reserve should be focused on its goals longterm price stability is the most important one as well as increasing economic growth, low Unemployment Rate. And we are there right now. Right. So policy should be roughly at normal. And what would you say to those people who believe that the fed itself has totally distorted the situation, that in a sense its force fed everybody candy to the point of being really assets that are massively overvalued and therefore could be in a sense punctured by aggressive moves in Interest Rates or Monetary Policy. Thats the fear. If you talk to a lot of investors, theyll say, hey, this doesnt end well. It might not end badly toe, but longer term it doesnt end well and thats what haunts a lot of people. Thats also why the fed has problems, no . You are 100 right. You know, at the moment when Interest Rates go up, bond prices will go down. What will happen to all the Pension Funds in the country, to all the insurance contracts that are out there . These companies will start losing money. They need to earn at least 3, 3. 25 to just break even. And there are a lot of Pension Funds that assume that they have 7 rate of return. How are they going to get 7 of return in this environment . And bond prices will fall. And thats when we will get into trouble. But therefore all the more important get it even now. The problem, bob, with your argument is that it completely dismisses whats happening in the Global Economy and global factors. I know thats not part of their dual mandate, but surely in an era where we are completely globally connected, which we learned during the financial crisis, the fed has to take into account that when it moves, when nobody else is doing it, that strengthens the dollar and wreaks all sorts of havoc on global economies, emerging markets, that ultimately will impact the u. S. Inflation view and economic view and its outlook, will it not . Well, these other countries what they got to do is they got to implement appropriate policies. Theres no way the Federal Reserve can increase the growth rate of france, of greece by Monetary Policy. France and greece got to pursue the proper domestic policies, fiscal policies as well as structural policies even more important. Once they get their structural policies right, then they can have higher growth. Its nothing to do with Federal Reserve policy. The problem is all the central bankers say it until theyre blue in the face and none of the politicians follow through. Bob, we have to leave it there. Thank you for your time. Bob hellor joining us there as we get more noise from Federal Reserve policymakers. Well, we had the latest shots fired in what is now an allout war for control of viacom. The war between Shari Redstone, the daughter of Sumner Redstone, and the existing management at viacom, and by extension perhaps a war that will also include a war of control over cbs, the other company that mr. Redstone currently controls through his 80 ownership of both companies through his 80 ownership of National Amusements. And that is where we find the center of the lawsuit filed this morning in the commonwealth of massachusetts. The Probate Family Court of norfolk is where in fact we will potentially see a judge decide the fate of these two companies because that is where philippe dauman, the ceo and George Abrams, longtime attorney for the redstone family, have both filed a suit saying that they need and want to be reinstated as trustees of the Sumner Redstone National Amusements trust. That trust, again, controls the stake in National Amusements which by extension controls viacom and cbs. Late last week both of those gentlemen were removed from that trust. They say by that lady right there, Shari Redstone, who they say has shown or has exerted undue influence on her father, Sumner Redstone, who in the complaint they describe as significantly infeebled who can no longer stand, walk, coherently communicate, can no longer read or write, lost the ability to swallow and requires all sorts of different help basically doing the basic functions of life. The simple argument they make is that Shari Redstone has in fact exerted undue influence on her father who in turn then has removed them, illegally, from their roles on the trust. We will see what of course follows here. This is not necessarily going to be a judgment on mr. Redstones competency in a way, i believe, a separate judge would have to rule on that but certainly well go to it, the argument of undue influence certainly hinging on the fact hes no longer capable of making his own decisions in a complaint that is well worth reading they go onto talk about how he is virtually being held a prison in his own home and unable to have contact with anyone from Shari Redstone deems unfavorable. This is an important battle here. I dont want to make light of it in any way because it does go to the heart of control of both viacom and cbs. Do we understand as we look at those Public Companies continuing to trade cbs and viacom what that could mean for the share price . Is it clear what the narrative would be any situation . It isnt. Shari redstone has been much more focused in the past on the management at viacom. If you recall she was the one lone dissenter when red stepped down and became clear she is not in favor of mr. Daumans continuing as the chairman and ceo one would assume based on previous comments. Cbs has been much less of a focus for her, but to your point, simon, we dont know the expectation i have based on conversations ive had is not that Shari Redstone would move in either way to sell any one of these companies. Would she injekt shareholder value into it . Is the assumption she would make them be run more efficiently . Well, that remains to be seen. Okay. That remains to be seen. We do believe she would potentially want to replace the board of directors at viacom and therefore install new management at that company. Of course the company has had a very rough go the last call it year and a half to two years as has the stock price down only 2 this year but down about 40 over the last year and a half. The saga continues. Oh, boy, does it ever. Meantime, a new nbc the wall street journal poll shows Hillary Clintons lead over donald Trump Shrinking to only three points. Just about five months away from the general election, what is behind those new numbers . Thats next. Will the volatility index, you know, the vix, prevent the fed from raising rates in june in our traders weigh in and what to do about it at tradingnation. Cnbc. Com. More squawk on the street coming up. A new nbc the wall street journal poll shows donald trump narrowing the gap with Hillary Clinton. John harwood has more on that. Check out how much its narrowed in April Hillary was ahead 11point spread. Look at these new numbers out this morning 4643 clinton with just a three percentage point edge over donald trump, thats within the margin of error. Now, you wonder why has that happened, well, look at this next chart. This is how each candidate is doing within their parties and you see donald trump with 86 support from republicans is doing better than Hillary Clintons 83 among democrats. Thats a world of difference from april when donald trump had only 72 of republicans. Hillary clinton is lagging behind now because shes got this continuing fight with Bernie Sanders, which continues to get bitter. Over the weekend Bernie Sanders not only criticized debbie wassermanschultz, the Democratic National chair, but said he was going to support financially her opponent in the primary. So that gives you an idea of how much the stakes have been raised in this democratic fight. Theres still a lot of hope among democrats that by the end Bernie Sanders is going to revert to party unity, to supporting Hillary Clinton, to trying to mobilize his supporters. But right now its weighing her down in the polls, carl. You know, john, within the gop, the commentary seems to be the reason hes getting extra support is simply hes doing well in the polls and hes winning generally. Does that also apply within the democrats . If you say actually hillary isnt winning as well, do the super delegates reconsider what they might do further down the line . In other words, does it open up to sanders to a greater extent or not . I dont think so. Look, super delegates are not swayed by general election polls showing Bernie Sanders hasnt been vetted nearly the way Hillary Clinton has running further ahead of donald trump. You cannot find a politician in washington dont know whether this is right or wrong, but you cannot find a politician in washington who thinks in the end Bernie Sanders, democratic socialist from vermont, would actually be a stronger general election candidate than Hillary Clinton and thats what drives the super delegates. Clearly here in the Business World were buzzing about mark cubans interview on meet the press and what he said about how hed consider pitches for v. P. From both democrats or republicans. Do you think theres anything to this story . Do you think that either campaign would actually be looking at him . There is not the slightest chance under the sun that Hillary Clinton would put mark cuban on her ticket. It is possible that donald trump could. Similar personality, but thats very unlikely as well because donald trump has said what he wants is an experienced politician who can help him pass the program saying ive got the business part covered. So it was interesting and mark cuban its notable he considers himself of Vice President ial caliber but hes not going to be on anybodys ticket. There was also a report republicans had approached him about a third party candidacy. It didnt exactly come from nowhere. Well, third party candidacys an entirely different thing. If he wants to put himself forward and do that, he would find some support. Im not sure its what the never trump people are looking for, but thats a different ball game. Im talking about on one of the two major party tickets. Yeah. Thanks, john. John harwood there. Changing gears to the Real Estate Market as retail in this country struggles. Retail real estate is actually leading a global expansion. Our own diana olick has more in d. C. On that. Hey, diana. Hey, simon. U. S. Retailers are seeking growth and the best driver of growth is to expand internationally. The u. S. Topped all other countries in opening retail brick and Mortar Stores overseas last year, according to cbre. All right, so where are they headed . No shock the top cities are in asia. The list starts with hong kong, then singapore, tokyo and taipei. After that moscow, london, dubai, beijing, bucharest and doha. Now, which stores are most popular . Well, blue jeans, believe it or not. U. S. Retailers though are taking homeware brands overseas which is traditionally more difficult because the stores are larger and theyre catering of course to different cultures. Still zara home and creighton barrel have had some successes. As far as foreign brands moving stores here, its a lot more difficult for them because the u. S. Market is more competitive. Its very mature and real estate prices for stores here are very high. Now, globally food and beverage sellers led the categories of foreign retailers entering cities, specifically coffee shops and restaurants accounted for 20 of foreign retailers entering cities with asia, again, showing the biggest demand for these. After that of course its all luxury. Back to you guys. All right. Diana, thank you very much for that Retail Real Estate snapshot. We are just 74 days away from the olympics in rio, but all eyes are on zika. The World Health Organization is meeting right now on now on tha. We will get the takeaways when we come back. Jake reese, day to feel alive jake reese, day to feel alive jake reese, day to feel alive the World Health Organization is assembling today, the zika virus a major topic ahead of the olympics in rio. Thats right. The director general of the w. H. O. Telling the World Health Assembly in prepared remarks that quote, the rapidly involving outbreak of zika warns us that an old disease that slumbered for six decades in africa and asia can suddenly wake up on a new continent to cause a Global Health emergency, saying zika reveals a consequence of the failure to provide universal access to Family Planning services especially in latin america and the caribbean, where zika is spreading now. She points out that what we are seeing looks more and more like a dramatic resurgence of the threat from emerging and reemerging Infectious Diseases and said the world is not prepared to cope. Here in the u. S. , officials are making similar warnings while we dont have local transmission via mosquitos yet we have had more than 500 travel associated cases in the u. S. States and many or locally acquired cases in u. S. Territory. The cdc said its monitoring 279 pregnant women with zika. All of this as the battle continues in congress for funding to fight the virus. Both the senate and the house have passed bills that fell short of president obamas requested 1. 9 billion in funding. The houses bill would give a third of that and require some resources to be diverted from other disease work like ebola. Many say now we need to do more to be prepared for Infectious Disease threats like these. Former ebola czar ron clain this weekend called for the creation of a new agency, phema, for Public Health Emergency Management agency, saying zika spreading mosquitos arent going to wait for congress. I would have thought those comments from the w. H. O. Are controversial but we will leave it there. Thanks very much. Lets send it to jon fortt for a look at whats coming up on squawk alley. Well, we will start with tim cook in india. Is he making any progress in making that fertile soil for apple to grow and maybe avoiding some of the mistakes Mark Zuckerberg and facebook made. We will touch on Sumner Redstone and viacom. And we will have insight into whats next in the world of potentially consolidating broker jamgs. Thats coming up on squawk alley. [ male announcer ] Tora Bora Fallujah argonne khe sanh midway dak to normandy medina ridge the chosin reservoir these are places history will never forget but more important are the faces we will always remember. But morits more than athe facnits reliable uptime. Mber. And multilayered security. Its how you stay connected to each other and to your customers. With centurylink you get advanced technology solutions, including an industry leading broadband network, and cloud and hosting services all with dedicated, responsive support. With centurylink as your trusted technology partner, youre free to focus on growing your business. Centurylink. Your link to whats next. [crowd cheering] i could get used to this. Now you can. When you lease the 2016 es 350 for 329 a month for 36 months. See your lexus dealer. Of fixodent plus adhesives. They help your denture hold strong more like natural teeth. And you can eat even tough food. Fixodent. Strong more like natural teeth. Fixodent and forget it. Relatively quiet start to the week. Obviously theres a large number of fed speakers out today and as we look forward into whats upon us for the next four days, all talking about this rate rise in june. Markets are flat. Apple is notable for the fact its been able to make some gains in that environment. More noises coming out of asia that maybe some of the suppliers think the orders they are getting would indicate the iphone 7 when it gets here perhaps will be a better seller than many had feared. The dow is up about 14 points. S p 500 is flat. Of course, apple has been running higher ever since it was revealed that Berkshire Hathaway took a 1 billion stake. Apple is trading at a onemonth high. You can see it. There are some of the biggest movers, up 1 . We are coming off of four straight weeks of declines for the dow. Thats the longest stretch since back in 2014. As for this week, new home sales tomorrow and the data really starts to take on a significance now that the fed is itching to raise rates this summer if the at a ti data could keep up. Janet yellen will speak at harvard with an economist and her words will be parsed for any signs that she you couldnt be more explicit than they would like to raise rates in june. But we havent heard from her. We heard they were looking towards raising rates but they consider all the factors as they come in, including the dollar which is getting a lot of play which is stronger against the euro, breaking below 112 against the euro. Thats been one of the linchpins of this entire Global Market stability with commodities and stocks. For now, little action. We will see what happens as the data comes through later in the week. On that note, lets send it to squawk alley. Good morning. It is 9 00 p. M. In new delhi, 11 00 a. M. On wall street. Squawk alley is live. . Good monday morning. Welcome to squawk alley. Jon fortt, Kayla Tausche and myself at post nine along with terry kowaja and dan fr oman. Good morning. A lot to get to. Tim cook continuing his tour around the world. His latest stop is india. Over the weekend he met with the Prime Minister modi discussing everng